Wall Street's unemployed look to cupcakes, Omaha
NEW YORK - Jessica Walter didn't go to Harvard University to study cupcakes, but they're what she does since losing her job as a vice president in credit strategy at Bear Stearns Cos.
"I want to teach kids to cook," said Walter, 27, who founded Cupcake Kids in New York to provide birthday parties and cooking classes for children. "The goal is to have this be my full-time job and make enough to live."
Wall Street professionals are trying new careers, and fetching smaller salaries, amid the elimination of 76,670 investment jobs in the Americas following the global credit crunch.
Bankers are "buying businesses for themselves, moving west or to Europe, including Russia, or to Dubai," said Jeanne Branthover, managing director of Boyden Global Executive Search in New York. "They're also moving totally outside what they do, buying a retail store or a ranch."
About 33,300 finance jobs in New York City, or 7.1 percent of the 2007 peak, will be cut by June 2009, the Independent Budget Office, a nonpartisan monitor of city finances, estimated in a May report.
"The job market is in the worst, most chaotic state I've ever seen it in fixed income," said Michael Maloney, who recruits finance professionals for Maloney Inc. in New York. "I've been doing this for over 30 years, and I've never seen anything like this."
Half the people working in debt sales, trading, or research in New York at the beginning of 2007 will have been fired by the end of this year or won't get a bonus, Maloney estimated.
Jeff Salmon said job jitters prompted him to swap investing in asset-backed securities at Bank of New York Mellon Corp. for keeping the books at a hair salon. He and his wife, Olga, opened a Great Clips franchise in Mercerville, N.J., that offers $12 haircuts for men and women.
"The structured finance market is so bleak right now, it makes sense for us to focus our energies on this," said Salmon, 49. "It's refreshing to not have to worry about whether I am going to have a job next week." The couple plans to open another Great Clips in October.
Traders and bankers who leave finance can expect to earn a fraction of what they used to. Compensation for employees on Wall Street averaged $399,360 in 2007, compared with $62,390 for New York City jobs outside the securities industry, according to the state comptroller's office.
Goldman Sachs Group Inc., which has cut 1,500 jobs, paid its employees an average of $661,490 last year, company filings show.
Walter, who studied economics at Harvard, is among those welcoming the opportunity to try something radically different.
"The biggest thing that I enjoy is being the jack-of-all trades of having my own business," she said. "It's a challenge."
Bear Stearns, where Walter worked, was facing bankruptcy before being acquired in May by JPMorgan Chase & Co., which fired 55 percent of Bear's 14,000 employees. Lehman Brothers Holdings Inc. has eliminated 6,390 employees and Citigroup Inc. has cut 14,100, according to data compiled by Bloomberg.
Gary Witt left as a managing director in structured finance at Moody's Investors Service to teach finance and statistics at Temple University in Philadelphia.
"It's hard to say if things were going well would I have left," said Witt, 49. "It didn't look like the industry would be any fun for the next few years."
Moody's, the oldest credit-ratings company, eliminated 275 jobs, or 7.5 percent of its workforce, to cope with a plunge in bond sales that sliced revenue from the credit ratings unit.
Bond salesmen and traders are trying everything from bartending to real-estate sales to make insurance and tuition payments for their families, Maloney said.
"I know a few guys that started gambling, playing poker to pay the bills," he said. Joshua Perksy took to the streets after being laid off as an investment banker at Los Angeles-based Houlihan Lokey. He strolled New York's Park Avenue in June wearing a sandwich board reading "Experienced MIT Grad For Hire."
"It's been slow and frustrating," said Persky, 48. "The only places to turn are hedge funds and boutique banks. I've never been unemployed this long."
While his gambit generated some job leads, none has panned out so far, Persky said. He's considering a move to Omaha.